Pfizer Update: Europe Approves Eliquis For Atrial Fibrillation

Pfizer‘s (NYSE:PFE) blockbuster potential drug Eliquis (co-developed with Bristol-Myers Squibb (NYSE:BMY)) has received the European Medicines Agency’s (EMA) approval for expanding the drug’s use to prevent heart attack and stroke in adult patients with nonvalvular atrial fibrillation, a type of abnormal/irregular heart beat. [1] The approval will certainly help boost optimism around the drug and could get the stock moving even as the approval was anticipated following a European medical panel’s positive opinion to extend the drug (Read European Panel Backs Pfizer’s Eliquis For Atrial Fibrillation). However, the drug still lacks the U.S. FDA approval without which the drug cannot achieve its full sales potential going forward.

Eliquis is a drug used in blood thinning and is part of the antithrombotic family, which helps prevent clotting inside the body that can restrict blood circulation to the organs. The drug is currently approved in many countries (excluding the U.S.) for preventing blood clots in patients who have knee or hip replacements. But the drug’s extension to patients with atrial fibrillation and acute coronary syndrome (related to the blockage of coronary arteries) holds the key for its future.

Atrial fibrillation increases the risk of stroke almost five times than those without it and is estimated to impact millions of individuals worldwide (1% of adults worldwide, 9 million in Europe and the U.S.). [2] Therefore, the condition offers a multi-billion dollar opportunity for drug manufacturers to come up with an antithrombotic drug that can help prevent heart attack in patients with a history of heart problems. The EMA’s approval will begin to open a larger market as the drug has not yet been approved for indication anywhere.

The EMA approval makes the drug’s case to receive the U.S. FDA approval stronger as the drug has been delayed two times, citing need for more information on management and verification of data. But we believe the drug will eventually be approved in the U.S. by early next year (around March). The drug has shown higher efficacy in preventing clots and strokes compared to warfarin, a standard treatment in clinical trials. The drug is also undergoing phase III clinical trials for the treatment of Venous thromboembolism (a blood clot within a vein), considered the third most common cardiovascular illness after acute coronary syndrome and stroke.

With the EMA approval, the company can fend off significant patents expiry in its cardiovascular division as Eliquis could garner as much as $3 billion in peak sales (Read Pfizer Patent Cliff: A Look At The Cardiovascular Drugs Division). However, much of this is dependent on the FDA approval and any setback there could have a substantial impact on the company’s value as Pfizer’s cardiovascular division (excluding Lipitor) contributes nearly 10% of the our $26 price estimate, which we are in the process of revising. Further, any delay in approval would strengthen the foothold of its closest rivals Johnson & Johnson‘s (NYSE:JNJ) Xarelto and Boehringer-Ingelheim’s Pradaxa.

By moving the trend-line in the chart below, you can see the impact of revenue from non-Lipitor cardiovascular drugs on our price estimate for Pfizer’s stock.

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